How the debate over emissions trading has helped create turmoil for the Australian Liberal Party

Patrick Cusworth is a public affairs consultant and a member of Hornsey and Wood Green Conservative Association.  He supported the Australian Liberal Party during the Queensland State elections in March 2009.

The Australian Liberal Party has elected Tony Abbott as its new leader, following a public loss of confidence in Malcolm Turnbull.  Following a packed Canberra meeting of Liberal MPs, Abbott beat Turnbull by 42 votes to 41 after the initial favourite, shadow Treasurer Joe Hockey, was eliminated in the first round of voting.  Known as both a social and economic conservative, the London-born Mr Abbott becomes the Liberal’s third leader since the 2007 federal election defeat to the Australian Labor Party, after Turnbull replaced Brendan Nelson last September.

Mr Turnbull, who at the beginning of the year was forced to endure ongoing threats of a challenge from former Liberal Treasurer Peter Costello, said he was "naturally disappointed” by the result, and that there would now be a "pretty dramatic change in policy" within the Liberal Party.  In particular, the issue of the Emissions Trading Scheme (ETS) is certain to prove a vital one in the build-up to Australia’s next federal election (which many have suggested could be called earlier than initially expected, despite the Prime Minister’s denials). 

Mr Abbott has long been an outspoken critic of Turnbull’s decision to support Labor Prime Minister Kevin Rudd's proposed legislation, with Turnbull appearing to be paying the price for failing to demonstrate sufficient concern for the potential economic impact of the scheme; that was despite securing amendments to the legislation which he claimed would have assisted farmers as well as saved “tens of thousands of jobs” and as much as $200 billion of investment.

Despite popular support amongst the Government’s backbenches, cross-party support for the ETS proposals was deemed politically necessary following opposition by both the Green Party (generally a supporter of Labor) on the grounds that the scheme was “insufficiently radical”, and the National Party (the Liberals’ coalition partner), due conversely to the possible effects upon Australia’s farming community.  Yet several political commentators have gone so far as to suggest that the Liberals’ leadership predicament was in fact engineered by Rudd as a means of forcing Turnbull to publicly support the Government on a key election issue, or to take a position of opposition and potentially drive the Party into the unelectable right.  In being seen to take the former option, backbench several Liberals accused Turnbull of pulling the party towards a potential landslide defeat.

This tactic may have backfired in the short-term for Rudd, since the unexpected timing of the Liberal leadership election resulted in the Senate’s failure to pass the legislation before the necessary deadline.  The delay is likely to ensure still further after Mr Abbott immediately addressed the issue following his victory, arguing that:

"This (the Emissions Trading Scheme) does deserve the most rigorous scrutiny. This is a $120 billion tax on the Australian public that is just for starters. We can't just waive that through the Parliament". 

However, the Labor Prime Minister will be delighted at the prospect of prolonged Opposition infighting, and given the slender margin of his victory – just one vote – Abbott may be left precariously vulnerable to the threat of rebels undermining his leadership by supporting the ETS.  Whilst opposition to the ETS may indeed offer the Liberals a potent electoral issue, it has been generally admitted by senior Liberals that the Party’s perceived attitude towards climate change cost it dearly in the 2007 federal election.

For these reasons, a fine-line approach will be vital in balancing economic sensitivity with a credible stance on climate change.  Consequently, the new Liberal leader’s policy of pushing for a Senate Inquiry to scrutinise the legislation appears both a wise and balanced one.  If the ETS remains unresolved prior to Kevin Rudd’s departure for Copenhagen, the Government (which has thus far has enjoyed high approval ratings) may itself be forced to walk the line between climate change commitments and economic responsibilities.

With the Liberals supporting their new leader’s policy of either deferring or voting against the ETS if the Government refuses to defer the Carbon Pollution Reduction Scheme Bill, Tony Abbott appears to have succeeded in his primary objective of uniting the right and moderate wings of his party on an issue which remains potentially divisive on all sides.  His second objective – to secure long-term support for his leadership – is likely to be achieved through a similar blend in his first shadow Cabinet.  Whether he can sustain this all the way to a federal election, the timing of which may still weigh heavily upon the eventual outcome of the Senate vote, remains to be seen.